December 30, 1991 - From the December, 1991 issue

USC’s Kreditor Comments on Housing Fees

With the housing linkage fee making its way toward the City Council, The Planning Report sought additional comments on this breakfast panel from Dean Alan Kreditor of the USC School of Urban and Regional Planning. 

I would like to be enthusiastic about any proposal to create more housing in Los Angeles. The need is apparent. Yet, I am extremely uneasy with a promise to increase housing production by levying an additional fee on new commercial development.

Firstly, the popular belief that such a fee will be taken out of the profits of new development shows a poor understanding of development economics. For a project to remain feasible, a fee must be transferable to tenants who in turn pass it through to their customers and employees. So burdened these enterprises will become uncompetitive and socially unrewarding. We should especially worry about the probable decrease in the number of jobs and total com­pensation. Without jobs and income, no housing policy is feasible. 

Secondly, the housing fee may be counterproductive. By artificially raising the cost of building, it is likely to reduce the amount of development and thereby reduce housing production. 


Thirdly, the current recession reminds us that we should take a cautious approach towards policies and programs written during periods of rising prosperity, since they may exacerbate efforts to twn around a sinking economy. We are learning, during this stagnant period, just how rapidly policies designed to tame growth can become painfully inappropriate. 

Finally, the introduction of such a fee reinforces our tendency to be overregulated and under-planned. We may wish to believe that a development fee will build us a better and more workable city, but in truth it is incapable of redressing years of conceptual inattentiveness, evidenced by our outdated plans and moribund planning agencies.


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